WETH (Wrapped Ether) is an ERC20-compliant token that represents native ETH in a standardized token format. This wrapper enables ETH to interact with decentralized protocols and smart contracts designed exclusively for ERC20 tokens, solving a fundamental compatibility challenge in the Ethereum ecosystem.

The ETH Compatibility Problem

Native ETH predates the ERC20 token standard and lacks the standardized interface that ERC20 tokens implement. While ETH serves as Ethereum's native currency for gas payments and value transfers, it cannot be directly used in protocols requiring ERC20 token operations like transferFrom, approve, and balance queries through standardized interfaces. This creates a technical barrier preventing ETH from participating in many DeFi protocols designed around ERC20 token assumptions.

Automated market makers like Uniswap v2 exemplify this challenge. The core protocol operates exclusively with ERC20 tokens to maintain uniform interfaces across all trading pairs. Direct ETH support would require duplicating substantial logic to handle native ETH separately from tokens, increasing complexity, gas costs, and potential vulnerability surface. WETH bridges this gap by wrapping native ETH into an ERC20-compliant representation.

Wrapping and Unwrapping Mechanics

WETH operates through a simple deposit-and-withdrawal mechanism. Wrapping ETH involves sending native ETH to the WETH contract via its payable deposit() function. The contract mints an equivalent amount of WETH tokens to the sender's address, maintaining a 1:1 peg—one WETH always represents exactly one ETH held in the contract. This process creates ERC20 tokens backed by escrowed native ETH.

Unwrapping WETH reverses the process through the withdraw(uint256) function. Users specify an amount of WETH to burn, and the contract destroys those tokens while returning an equivalent amount of native ETH. The 1:1 redemption guarantee ensures WETH maintains parity with ETH, as arbitrage opportunities would immediately eliminate any price deviation. The WETH9 implementation provides the canonical and widely-adopted WETH contract on Ethereum mainnet.

User Experience Abstractions

While WETH provides technical necessity, requiring users to manually wrap and unwrap ETH creates friction that harms user experience. Modern DeFi interfaces implement automatic wrapping abstractions that hide this complexity. Periphery contracts like Uniswap's routers include specialized functions such as swapExactETHForTokens that accept native ETH, automatically wrap it into WETH, execute the swap, and return results—all within a single transaction.

These convenience wrappers significantly improve usability while maintaining underlying WETH mechanics. Users can trade native ETH without understanding wrapping processes, while protocols maintain clean ERC20-only architectures. Gas overhead from wrapping remains, though periphery optimizations minimize costs by combining operations into atomic transactions that prevent unnecessary intermediate state updates.

Security Considerations

WETH's simplicity contributes to its security—the contract contains minimal logic focused exclusively on deposit and withdrawal operations. However, integration vulnerabilities can arise when protocols make incorrect assumptions about WETH behavior. Some contracts erroneously treat WETH transfers as potentially triggering reentrancy through callbacks, when in fact WETH implements standard ERC20 transfer logic without external calls.

Approval management for WETH follows standard ERC20 patterns, requiring users to grant spending allowances before protocols can transfer WETH on their behalf. Unlimited approvals create long-term risk exposure—if an approved contract becomes compromised, attackers can drain approved WETH balances. Users should consider granting bounded approvals limited to specific transaction amounts rather than infinite allowances.

Multi-Chain WETH Variants

As Ethereum's layer-2 and sidechain ecosystems expanded, each network deployed its own wrapped ETH variants. Networks like Optimism, Arbitrum, and Polygon maintain separate WETH contracts representing native ETH on their respective chains. These variants operate identically to mainnet WETH but exist as separate token instances with distinct contract addresses and no direct fungibility across chains.

Bridge protocols enable WETH movement between chains, though bridged assets technically represent claims on WETH held in bridge escrow rather than native wrapped ETH on destination chains. Cross-chain protocols must carefully specify which WETH variant they reference, as mixing implementations creates integration failures. Users should verify WETH contract addresses when providing liquidity or trading on non-mainnet networks to ensure they interact with legitimate canonical WETH contracts rather than potential scams or incompatible implementations.

Alternatives and Evolution

WETH represents one approach to the ETH compatibility problem, though alternatives exist. Protocol-native ETH support involves duplicating logic to handle both native ETH and ERC20 tokens, as seen in Uniswap v1. This approach increases complexity and gas costs, leading v2 and subsequent versions to standardize on WETH-only architectures.

Account abstraction proposals like ERC-4337 suggest future paths where native ETH could interact with protocols more seamlessly without requiring wrapping. However, until such standards achieve widespread adoption, WETH remains the pragmatic solution for ETH-protocol interoperability, with its simple design and broad acceptance making it unlikely to be displaced in the near term.